The Sustainable Development Goals

The word ESG (Environmental Social and Governance) has definitively gained popularity in the latest years. Its use has seen exponential growth among all different industries. It has become more important, driven especially by climate change and social impact thematics. In particular by companies' efforts to seek competitive advantage and differentiation. While in the financial space, investors desire to incorporate non-financial analysis for better returns.

Sometimes there is confusion in using and claiming terms like responsible, sustainable, impact and ESG investing. People and companies can rely on several different ESG features, metrics and data (i.e. carbon footprint, climate change, labour management, corporate governance) when looking to be sustainability compliant. There is still a lack of clear guidelines for followers for better practices, but the United Nations' Sustainable Development Goals, set up in 2015 by the United Nations General Assembly to succeed the Millennium Development Goals, could be considered the vademecum to achieving a better and more sustainable future for all.

The Sustainable Development Goals are included in an UN-GA Resolution called the 2030 Agenda. They represent a call for action to address the global challenges we face, including poverty, inequality, climate change, environmental degradation, peace and justice. Promote prosperity while protecting the planet. They recognize that ending poverty must go hand-in-hand with strategies that build economic growth and address a range of social needs including education, health, social protection, and job opportunities while tackling climate change and environmental protection. They are vital for a recovery that leads to greener, more inclusive economies, and stronger, more resilient societies.

The Sustainable Development Goals, which cover the three dimensions of sustainable development (economic growth, social inclusion and environmental protection), are grouped into 17 interlinked global goals:

1) No Poverty: the economic fallout from the global pandemic has increased global poverty - for the first time since 1990. Circa 10 per cent of the world population, still live in extreme poverty today, struggling to fulfil the most basic needs like health, education, and access to water and sanitation. The first target is to eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day, by 2030;

2) Zero Hunger: the number of people who suffer from hunger began to slowly increase again in 2015. The broad target is to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture;

3) Good Health and Well-being: ensure healthy lives and promote well-being for all at all ages. Before the pandemic, major progress was made in improving the health of millions of people and reducing mortality ratios;

4) Quality Education: obtaining an inclusive and equitable quality education is the foundation to promote lifelong learning opportunities for all, improving people’s lives and sustainable development;

5) Gender Equality: Gender equality is not only a fundamental human right but a necessary foundation for a peaceful, prosperous and sustainable world - i.e. empower all women and girls;

6) Clean Water and Sanitation: clean, accessible water for all is an essential part of the world we want to live in;

7) Affordable and Clean Energy: energy is central to nearly every major challenge and opportunity. It is extremely important to ensure access to affordable, reliable, sustainable and modern energy for all;

8) Decent Work and Economic Growth: Sustainable economic growth will require societies to create conditions that allow people to have quality jobs. It is important to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all;

9) Industry, Innovation and Infrastructure: investments in infrastructure are crucial to achieving sustainable development. The target is to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation;

10) Reduced Inequality: to reduce inequalities within and among countries, policies should be universal in principle, paying attention to the needs of disadvantaged and marginalized populations - i.e. women are more likely to be victims of discrimination than men for religion, ethnicity and sex;

11) Sustainable Cities and Communities: make cities and human settlements inclusive, safe, resilient, and sustainable. There needs to be a future in which cities provide opportunities for all, with access to basic services, energy, housing, transportation and more - i.e. safe and affordable housing, affordable and sustainable transport systems, inclusive and sustainable urbanization;

12) Responsible Consumption and Production: ensure sustainable consumption and production patterns - i.e. achieve the sustainable management and efficient use of natural resources; reduce global food waste and food losses along production along the supply chains;

13) Climate Action: it represents a global challenge that affects everyone, everywhere. It is important and urgent to action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy. Currently, climate change is affecting the global community in every nation across the world. The impact of climate change, even via exacerbating the frequency of natural disasters, not only impacts national economies but also lives and livelihoods, especially those in vulnerable conditions;

14) Life Below Water: careful management of this essential global resource is a key feature of a sustainable future. Conserve and sustainably use the oceans, seas and marine resources for sustainable development;

15) Life On Land: sustainably manage forests, combat desertification, halt and reverse land degradation, and halt biodiversity loss. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss;

16) Peace, Justice, and Strong Institutions: promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels - i.e. reduce violence; protect children from abuse;

17) Partnerships: revitalize the global partnership for sustainable development. International cooperation is vital to achieving each of the 16 previous goals.

Despite some governments may fail to support sustainable development, every person or company can have a positive impact by following the goals aforementioned. They can guide our daily file under the economic, socio-political, and environmental dimensions. Commitment and effective actions by all of us are what we only need for peace and prosperity for people and the planet, now and in the future.

The Fashion Pact

How many sectors are committed to supporting the "ESG transition"? The global effort today is definitively considerable. Any area of the world economy has shown substation progress among the E, S and G aspect. Sometimes, most of them are not well reported by the media - often focused on negative headlines without paying the right attention to the world's steps toward full sustainability. The fashion industry, being one of the most receptive and dynamic sectors, committed itself, in a large-scale pact, to transform its industry.

It was created in October 2020 and launched as a mission given to Kering Chairman and CEO, François-Henri Pinault by French President, Emmanuel Macron, and was presented to Heads of State at the G7 Summit in Biarritz.

Since its establishment, the Fashion Pact has organised itself as a CEO-led coalition, with a 14-member Steering Committee that is supported by a CSO 23-member Operations Committee and a secretariat Task Force. It is a global coalition of companies in the fashion and textile industry - fashion, sports, lifestyle and luxury - including their suppliers and distributors, all committed to a common core of key environmental goals in three areas, stopping global warming, restoring biodiversity and protecting the oceans, signed the Fashion Pact.

For the first time in the Fashion industry, the CEOs of 60+ global leading companies are united to fight together against climate change, global inequality, and the destruction of the natural world. Collective action for the environment. Featuring global players, niche brands, and subject matter experts from sectors along the entire value chain - together representing 14 countries, over 200 brands and over 1/3 of the fashion industry, each eager to leverage collective action to scale and achieve impact. The multi-sector collaboration will be one of the key drivers to achieving end-to-end impacts along the supply chain.

Members have identified one common agenda with first actions and seven tangible targets -across the three themes - to jointly spearhead and scale sustainability in the fashion industry. On the Climate theme, signatories have committed to the implementation of Science Based Targets (SBTs) for Climate to achieve net-zero carbon impact by 2050: 1) implementing the principles of the U.N. Fashion Charter, 2) achieving 25% low-impact materials sourcing by 2025, and 3) achieving 50% renewable energy by 2025, and 100% by 2030 in their operations.

On the Biodiversity theme, despite it being still an emergent issue of focus, the Fashion Pact has committed to the protection of key species as well as the protection and restoration of critical natural ecosystems. Together with “Nature of Fashion'' webinars, companies will map the supply chain for biodiversity, create Science Based Targets for Nature, and develop biodiversity strategies. Members have committed to 1) individual biodiversity blueprints by the end of 2020, and 2) supporting zero deforestation and sustainable forest management by 2025.

In the Oceans pillar, The Fashion Pact’s first area of focus is on eliminating problematic and unnecessary plastic in the packaging. Signatories will 1) achieve the elimination of problematic and unnecessary packaging in B2C packaging by 2025 and in B2B by 2030

2) ensure that at least half of other plastic packaging in B2C is 100% recycled content by 2025, and by 2030 for B2B.

Boston Consulting Group (BCG) has developed a digital dashboard of KPIs and will steer companies on this long journey. In this early stage, companies have aligned on shared standards, committed to joint frameworks, and begun the implementation of action plans. Has been already documented that the increased use of renewable energy and reduced reliance on unnecessary and harmful plastic.

Within most companies, significant individual action is already underway to reduce GHG emissions. Members achieved significant progress towards the transition to lower climate impact raw materials with, for example, ~40% of the reported cotton volume of members being lower impact, as well as having 1/3 of signatories on track to achieving 50% renewable energy, and more than half of signatory brands have eliminated plastic packaging in their retail bags - while there have been a lot of challenges in hangers and B2B transport bags, with only 15% of signatories having achieved elimination.

Despite the different levels of progress, collective action can scale innovation to close the gap. We are just at the beginning of this long journey. The fashion industry, moving to a more durable, and ecologically responsible business, could inspire other sectors to join the transition.

The Paris Accord During Wartime

Climate change is a common concern of humankind. For many people, it is just a recent problem to address, but in reality, post-cold war, due to issues relating to sustainability, member states at the United Nations Conference on Environment and Development (UNCED) in 1992, also known as the Rio de Janeiro Earth Summit, or just the Earth Summit, decided to collaborate in addressing some common issues: production of toxic components, replacing fossil fuels and support a proper usage of water.

Today, when we speak about climate change, the first thought goes to the well-known Paris agreement, sometimes referred to as the Paris climate accord. It is the legally binding international treaty, adopted in 2015 by 196 parties at the United Nations Climate Change Conference near Paris, to limit global warming by keeping the rise in mean global temperature to well below 2 °C (preferably 1.5 degrees) compared to pre-industrial levels. It is a landmark in the climate change process, where nations committed to achieving this long-term temperature goal and agreed to put in place international cooperation and coordinated solutions, to have net-zero emissions by 2050.

Climate change is a global problem that goes beyond any border. Every 5-year cycle each country submits its increasingly ambitious plan for climate action known as nationally determined contributions (NDCs), where they communicate actions to reduce their Greenhouse Gas emissions. At the same time, each nation formulates non-mandatory long-term low greenhouse gas emission development strategies (LT-LEDS) to provide a vision for future development.

Under the enhanced transparency framework (ETF), designed to build trust and confidence, all countries by 2024 start reporting their contribution, action and progress of their share to this global effort. Through the biennial transparency report (BTR) all the information will feed into the Global stocktake which will assess the global path toward the long-term goals (article 14). By 2030 we should have the first important results if the world continues this path and constantly increases its effort to achieve carbon neutrality targets. Something easier to write than to apply and reach. Annual emissions hoover around current record highs of about 40 gigatons of CO2 equivalent. Trying to reduce them more and to remain in the carbon budget will be costly: economic and social.

Taking into consideration the global oil demand, today's consumption holds just above 100 million barrels a day. A scenario that keeps oil around much longer and us away from the convergence to the net-zero emissions. In reality, after the pandemic, carbon emissions have recovered faster than expected and are heading now even higher making the climate goals harder to be reached. This “re-carbonisation” is even more pronounced during the current geopolitical tensions. Russia's invasion of Ukraine took attention back to “old” energy sources. The energy supply crunch has created a difficult situation for member states that could delay climate goals by bringing coal power plants back online and business lobbies have pointed to the Ukraine crisis to push for changing environmental rules. The same trend could be spotted even in the EU ETS carbon prices. EU allowances (EUAs) prices collapsed with a clear message. Investors are betting that the EU will relax its rules and favour more coal-burning power stations.

It is a very challenging situation with a difficult trade-off on the table. Becoming independent from Russian hydrocarbons but with environmentally unsustainable sources. We can’t forget the importance of reaching net-zero greenhouse gas emissions. Governments will have a tough mandate to secure the energy strategy with renewables power as much as they can. There is no time to waste in the passage from fossil fuels. A cleaner future is the best solution for everybody.